World

Moody's lowers NZ outlook to 'negative' on fiscal risks

By AAP Newswire

Apr 22, 2026

New Zealand’s Beehive building and parliament in Wellington — New Zealand is warned that weaker growth and higher debt costs ‌are pressuring its fiscal outlook. -AAP Image

Credit rating agency Moody's has downgraded New Zealand's outlook to negative from stable, citing increased risks ‌to the country's fiscal trajectory amid global economic and ‌geopolitical uncertainty.

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Moody's affirmed New Zealand's top-tier Aaa rating, thanks to support from strong institutions and policy framework, even as weaker growth, tight monetary policy, and higher debt servicing costs ‌add pressure ‌to ⁠the fiscal outlook.

"Global economic and geopolitical uncertainty present downside risks to growth," the agency said in a report released on Wednesday.

"Inflation pressures also persist, including fuel price increases, stubborn non-tradeable housing costs and utility prices, and higher ⁠electricity costs."

Moody's said ‌New Zealand's return to a budget surplus had been pushed back by ‌a year, while recent shocks had increased the debt burden and weakened debt affordability.

Recent data underline those concerns.

New Zealand's annual inflation rate was unchanged at 3.1 per cent in the first quarter, remaining above ‌the central bank's target range and increasing the likelihood of further interest rate hikes later in 2026.

In March, Fitch lowered New Zealand's outlook to negative from stable, citing increasing difficulty in reducing debt due to delayed fiscal consolidation.